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Palo Alto (PANW) Moves 5.8% Higher: Will This Strength Last?

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Palo Alto Networks (PANW - Free Report) shares soared 5.8% in the last trading session to close at $362.45. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.9% loss over the past four weeks.

The upswing came after Palo Alto Networks reported impressive third-quarter 2021 results and raised the full-year outlook. Palo Alto Networks delivered third-quarter non-GAAP earnings of $1.38 per share, which surpassed the Zacks Consensus Estimate by 7.81%. Moreover, the bottom line compared favorably with the year-ago quarter’s earnings of $1.17 per share. Additionally, the company’s revenues of $1.07 billion improved 24% year over year. The figure also beat the Zacks Consensus Estimate of $1.06 billion.

Buoyed by the impressive quarterly performance, the company raised its guidance for full-year 2021, creating an optimism among investors.

Notably, rise in the remote-working trend is triggering a greater need for stronger security.  This trend is spurring demand for the company’s next-generation security platforms. Increasing adoption of the company’s Prisma and Cortex offerings is an indicator of this.

Price and Consensus

Price Consensus Chart for PANW

This security software maker is expected to post quarterly earnings of $1.42 per share in its upcoming report, which represents a year-over-year change of -4.1%. Revenues are expected to be $1.16 billion, up 22.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Palo Alto, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on PANW going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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